Kevin Kerr: Not buying gold now is \’somewhat foolish\’

The Russian invasion of Ukraine is only one of many reasons behind higher prices for gold, according to a post by ITrustGold Editor Kevin Kerr that appeared in its 2014 Gold SuperCycle Report.

Bloomberg

“Prospects for gold in 2014 have increased significantly in the face of fast moving Ukrainian developments,” he wrote.

Prices for the metal
have been very volatile in the short term, but the downside risk, especially when gold\’s decline last year is factored in, is “very limited,” said Kerr, who’s also editor of CommodityConfidential.com. Gold futures prices dropped 28% last year.

“Not taking a long position in gold is somewhat foolish at this stage,” he said. (A long position is essentially a bet that prices will go higher.)

Kerr’s comments are contrary to those of Brien Lundin, editor of Gold Newsletter, who said in a recent note that gains in gold on the back of the turmoil in Ukraine represent a “sucker’s rally.” The best time to buy gold is during “post-crisis corrections, and not during the crisis-fueled rallied,” he said. Read: Gold’s gain is a ‘sucker’s rally’, says Brien Lundin.

According to Kerr, other catalysts for gold gains include: The economic debacle and non-stop money-printing has “run amuck,” and with resources getting tighter and tighter, there is going to be more “fiat (paper) currency sloshing around.”

So consumers will need more of that paper money to buy more real things, he said, referring to the situation as hyperinflation.

One solution to hyperinflation is to switch to a non-fiat form of money, and one of the oldest currencies in the world is gold, Kerr said.

At the same time, the Chinese “cherish gold as the premier symbol of wealth and store of value,” and they’re buying the metal “hand over fist.”

“If you’re worried about the U.S. economy, we suggest you buy gold,” said Kerr. “And if you’re not worried about the Chinese economy, buy gold.”

He admits that gold will have a “volatile time” climbing over $2,000 an ounce and beyond, but “it’ll happen much quicker than most ‘experts’ think as demand picks up.”

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